Stocks rise despite weak jobs report; Dow, S&P set new record highs

Stocks closed modestly higher in thin volume on Friday despite a tepid jobs report. While the data was disappointing, it still showed job growth and may also make the Federal Reserve a bit more hesitant about curtailing its bond purchases in September.

The quality of the jobs being created is also an issue. Burt White of LPL Financial pointed out, "Over the last four months we've created 4.2 part-time jobs for every one full-time job. That trend is not going in a good direction."

Among S&P sectors, consumer discretionary and materials stocks led the gainers. Energy fell after disappointing earnings from oil giant Chevron.

After hitting new highs the markets can still advance. "I think the market grinds higher," Bob Doll, chief equity strategist at Nuveen Asset Management, said. "We're not going to go up another 18 percent as we have since the first of the year in my opinion. But I think the market ends higher than where it is today."

The jobs data may push back the timing, or at least scale, of a potential Fed taper.

St. Louis Fed president James Bullard said in a speech Friday that the central bank "needs to see more data" before it makes a decision about slowing the pace of its $85 billion-a-month bond-buying program.

AIG stock rose after the company posted strong earnings and said it would return capital to shareholders.

In other news, Dell's special committee and the buyout group led by Michael Dell reached an agreement that would help clear passage of the deal. The deal calls for $13.75 per share and a special dividend of 13 cents per share. Investor Carl Icahn, who has proposed a rival bid, said the move is not enough. "We are not satisfied – we believe that an increase of a mere 13 cents is an insult to shareholders," he said in a press release.